Daunting amount of work remains to achieve SDG7’s universal access goal, new AEEP report shows

By John Hamilton , Ajay Ubhi

African nations, the governments of partner countries, international financial institutions (IFIs) and private investors are increasing their commitments to achieving universal energy access, the seventh of the United Nation’s sustainable development goals (SDG7). But the prospects of reaching the SDG7 target by 2030 are receding as population numbers continue to rise. A daunting amount of work remains to be done if SDG7 is to be achieved.

In a newly published report commissioned by the Africa-EU Energy Partnership (AEEP), the African Energy team – via parent company Cross-border Information – has analysed financial flows towards SDG7 over the past seven years and their estimated potential trajectories to 2030 and beyond.

Its central conclusion is that a pathway to SDG7 still exists even if the original 2030 date is likely to be missed.

The AEEP launched the 2022 edition of European Financial Flows on SDG7 to Africa at the International Renewable Energy Conference (Spirec) in Madrid on 21 February. It follows up a first edition that was produced in September 2021 (AE 445/8).

A breakdown of the figures shows co-operation between African national governments and European institutions and members states – now often referred to as ‘Team Europe’ – is producing results. This will be welcome news for policy-makers who have put energy co-operation between the continents high on the agenda (AE 455/30 ).

The report’s other main conclusion is that the key to achieving the SDG7 goal is to harness much greater contributions from the private sector.

African governments committed €13.7bn ($14.6bn) to SDG7 projects in 2020. Global overseas development assistance (ODA) accounted for a further €4.8bn, while the private sector committed €2.3bn. Total commitments of €21bn were substantially more than the €16.7bn committed in 2019 and approached the €22bn committed in 2018.

Over the past seven years, total commitments have increased at an average of 3.3%/yr, the report found. It estimates that if this trend continues, the financial target set by the International Energy Agency (IEA)’s ‘sustainable Africa scenario’ (SAS) will be achieved. However, rather than a total of €200bn being invested from 2022 to 2030, the end date will be shifted to 2034.

Clearly it is not just how much is spent but how that money is deployed that matters for achieving SDG7. There are multiple paths for delivering sustainable clean energy to the more than 600m inhabitants of the continent who live without it.

Other benchmarks can also be used. The African Development Bank (AfDB)’s New Deal on Energy estimated that investments might have to reach between $60bn and $90bn to achieve universal access.

Trajectories to 2034

The AEEP report’s conclusion argues that “it is essential that external lenders and international financiers, along with African national governments and financial sources, commit to mobilising and disbursing increasing levels of finance.”

It urged multilateral and external public sector financers “to maintain or increase the trajectory of increased commitments”, and argued that, while national governments also needed to do this, “it is not realistic to place the burden entirely on increased national public sector spending across the continent.”

So to fill the gap, government and development finance institutions (DFIs) needed to “urgently work together to catalyse a substantially increased participation from domestic and international private sector investors and lenders… such as local markets and pension funds.”

Delving into the detail of the numbers, the report pointed out that South Africa and Egypt accounted for 55% of total African government commitments. As Egypt achieved full energy access in 2016 and South Africa’s is at about 85%, much of their energy spending will thus have been on priorities other than access. The report’s adjusted target allowed for governments collectively committing an additional €200m/yr to SDG7 each and every year this decade.

To get to SDG7 by 2030, the amount invested would have to increase more than fivefold more quickly, rising from €8.26bn in 2022 to €17.24bn in 2030.

The report also suggests that international ODA must increase by approximately €190m/yr to maintain the 2034 pathway. To achieve the target by 2030 an increase of €1.26bn/yr would be needed.

Figures from 2014 to 2020 show that “under the right conditions, the private sector has the capacity to deliver exponential growth for SDG7,” the report said. To achieve the 2034 pathway, a year-on-year increase of €190m in private sector investment is needed following the trend set since 2014. However, to meet the 2030 target an additional €720m would be needed each year.

Getting results from the money

Much of the discussion at the report’s launch event in Madrid centred on the optimum ways of achieving these targets.

AEEP head of secretariat Johan van den Berg said one lesson was that “long lead time” priorities, such as the densification of the power grid, should be tackled immediately so SDG7 is achieved no later than the required funding will allow. “The money is there but we have to look at the engineering, and the work that has to happen to get energy to people,” Van den Berg said.

Similarly, Global Energy Transformation Programme (GET.pro) programme manager Daniel Werner said policy-makers should look beyond the numbers to question what was happening on the ground and why more progress is not being made. Werner said: “What puzzles me is that there is a lot of investment. So it that the right policies are not in place? What is wrong? Do we not invest the money efficiently?”

Increasing the share of private money

Werner added that it was evident that the private sector had a critical role to play and its current contribution of just over 10% could be a lot more. “The private sector in mature markets contributes half or three-quarters of funding. So increasing this share is one of the key factors,” he said. “It needs financing but also bankable projects.”

Read the rest of the article alongside a series of illustrative interactive graphics